When a loved one dies as a result of another person’s negligence, wrongful death law allows loved ones to recover damages for the tragedy. While most wrongful death settlements are not taxable by the IRS, there are some exceptions. Here’s what you need to know about the process.

What Constitutes Wrongful Death?

Wrongful death law covers a variety of situations that can either be intentional or unintentional. When a death occurs as a result of another person’s purposefully malicious behavior, whether it’s assault, battery, or murder, it is considered intentional. When someone dies due to another person’s reckless or negligent behavior, as is the case with medical malpractice suits, nursing home neglect, or car accidents, it’s considered unintentional. 

Can My Wrongful Death Settlement Be Taxed?

Settlements awarded in unintentional wrongful death cases are typically compensatory, which means they are designed to cover costs that are incurred as a result of the death, such as medical bills and funeral expenses. Because of their nature, settlements from these types of lawsuits are not considered income by the IRS and do not need to be reported on your federal tax returns.

In most cases of intentional wrongful death, however, additional payments are awarded to the plaintiff on top of punitive damages. These fees are meant to punish the defendant for their actions because they were purposely cruel and malicious. Settlements of this nature are considered income by the IRS and subject to income tax. Common examples of punitive damages include payments for emotional distress or lost wages.

For more information about wrongful death law, contact the attorneys at Egan & Richgels, S.C. in La Crosse, WI. With nearly 40 years of experience tackling a variety of cases, including personal injury and medical malpractice suits, they know how to fight for their clients and get them the settlements they deserve. Visit their website to learn more about these seasoned accident attorneys, and call (608) 784-0087 to schedule a consultation today.